Fair business practice is the idea that governing bodies refer to when dealing with trust issues and breaches in antitrust law and the point is to make sure that competition is not hindered in any way. However, anti-competitive practices do exist and are the focus of many legal institutions, for example, the Department of Justice in America is focused on getting rid of anti-competitive practices in healthcare, especially in areas such as price-fixing and in circumstances where healthcare providers attempt to persuade customers to drug providers that are cheaper for that provider (1).
The price-fixing issue in pharmaceuticals can be considered as more of amonopoly risk in America because the price of drugs continues to increase in order for there to be insurance coverage and also to cover patents but in the EU, there isn’t that much of a fear of this escalating out of control due to the public-payers element that limits price increases but risks do still exist.
In the pharmaceutical industry, because there are so many mergers and acquisitions of smaller companies by large companies that another potential issue that is closely regulated in the industry is how much market power or market control companies have over the industry. This becomes especially important when considering the treatment of patients on healthcare- it is obviously important that patients get the best drug treatments for their illness and not the drug treatments that are being pushed or promoted above others due to a greater market controls. Product licensing agreements of the products of smaller companies to larger companies in exchange for capital and also greater expertise can also influence market power and so there is importance for market regulation but also for there to be clarity of such deals to make sure that there isn’t too much market control over a certain threshold (2).
In the UK, the Competition Act 1998 and the Enterprise Act 2002 sets out the competition law and the CMA is the body has control of the jurisdiction concerning mergers and acquisitions and can conduct investigations. As I have looked into this subject, I am under the impression that in America, antitrust lawsuits are discussed more in the public eye, in comparison to the UK where it seems that the issues that are present aren’t discussed due to the NHS. In the US, because healthcare is privatised, issues like price-fixing and market control and other unfair practices directly effect the customer whereas in Britain, the fact that most services are covered by the NHS, removes that concern in the mind of the regular individual when it comes to specific healthcare pharmaceuticals. Excessive pricing at the supplier and distributive level led to fines equaling £89.4 million were given to Pfizer and Flynn Pharma in relation to phenytoin sodium capsules and Reckit Beckinser were fined for delisting Gaviscon Original Liquid so that doctors would be more likely to prescribe their sister product- Gaviscon Advance Liquid rather than generic supermarket brands (3). These are examples of the NHS being overcharged for drugs and is usually the result of the de-branding of medicine- in response to companies losing the power and reputation of a brand, they account for it by increasing prices to account for the possible decrease in sales. However, the 6000% drug price increase on a thyroid treatment from the Concordia Healthcare, which was only possible due to their ‘dominant position’(4).
Price increases are an issue on both sides of the Atlantic it seems and regulation of whether these increases are viable is extremely important; a 6000% increase cannot be justified when the price of production remains the same. It is important for businesses to make profit, of course but when they can manipulate market power to force price increases that are unfair and drive out competition. I wonder if a policy where there are price increase limits on any deal would be something that governments should consider more seriously if not already in place.
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- ‘Healthcare antitrust enforcement remains a top priority for DOJ’, E.Rappleye, Becker’s Hospital Review, https://www.beckershospitalreview.com/hospital-transactions-and-valuation/healthcare-antitrust-enforcement-remains-a-top-priority-for-doj.html, [Accessed 27/12/18]
- ‘Competition and Antitrust Issues in the Pharmaceutical Industry’, Patricia M Danzon PhD, The Wharton School, University of Pennyslyvania, Competition-and-Antitrust-Issues-in-the-Pharmaceutical-IndustryFinal7.2.14.pdf
- ‘Pharmaceutical Antitrust’, Getting the Deal Throughhttps://gettingthedealthrough.com/area/26/jurisdiction/22/pharmaceutical-antitrust-united-kingdom/[Accessed 27/12/18]
- ‘Is the NHS being taken for a ride on drug prices?’, Nils Pratley, The Guardian, https://www.theguardian.com/business/nils-pratley-on-finance/2017/nov/21/nhs-drug-prices-pharmaceutical-firms [Accessed 27/12/18]